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Finance Minister Arun Jaitley on Tuesday said there is no inherent bias or mandate in the Terms of Reference (ToR) of the 15th Finance Commission and “a needless controversy is sought to be created”.
In a Facebook post, Jaitley said, “The share in Central taxes is allocated to the States based on recommendations made by the Finance Commissions (FCs) to help States to meet fiscal deficiency in providing a minimum standard of services to their people. This calls for assessing States’ ‘needs’ on rationale and equitable basis.”
He reiterated that the FCs use an appropriate criteria to assess the true needs of States. Population works very well for the needs of the people in quantitative sense, he wrote. “Another criterion, the Income Distance, which captures very well relative poverty of people in the States, is used to assess qualitative needs. These two parameters allocate more resources to the populous and poorer States, which need additional funds for providing education, health and other services to the people, which own resources of these poorer States may otherwise not allow,” he pointed out.
“The 14th Finance Commission rightly used the 2011 census population data to capture the demographic changes since 1971 to make realistic assessment of the needs of the States. It allocated 10 per cent weight to 2011 population. The 14th FC had allocated a 42 per cent share in the Central Taxes to the States, more than ever before,” he said.
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